Here Are All The People Plotting to Kill the McDonald's Happy Meal

Business Insider
Chile bans marketing of toys in children's food
.

View photo

FILE - This Nov. 8, 2010 file photo shows a Happy Meal at a McDonald's restaurant in San Francisco, Ca. McDonald's, Burger King, Kentucky Fried Chicken and other fast-food companies are being sued in Chile for violating the country's new law against including toys with children's meals. The law took effect in July 2012 and its author, Sen. Guido Gerardi, filed suit Wednesday, Aug. 1, 2012, accusing the companies of knowingly endangering the health of children by marketing kids' meals with toys. (AP Photo/Eric Risberg, File)

This week, Brazilian consumer protection agency Procon fined McDonald's $1.6 million for targeting children with advertising and Happy Meal toys.

While this will have little effect on the fast-food behemoth's bottom line (the company spends $2 billion annually on advertising alone), a precedent has been set. More fines aimed at McDonald's marketing could follow.

"This is not an isolated case," urged Renan Ferraciolli, Procon's top lawyer. "There's no need to appeal as they do to children without the maturity or the rationality to enter the market as consumers."

The Happy Meal is one of McDonald's most successful marketing devices: Happy Meals are rumored to account for around 10% of all sales.

But the Happy Meal has collected a range of enemies who want to see it die. Here are a few of them:

Health activists:

Childhood obesity has doubled, while adolescent obesity tripled, in the past three decades. In an unfortunate coincidence, the Happy Meal is 34 years old. Suspicion that these two things are related has led to growing action by consumer groups around the world.

View gallery

.

Natesh Ramasamy/Flickr

These groups seek to tone down the intensity with which the products are marketed to children. According to a study from Yale University's Rudd Center for Food Policy and Obesity, the average preschooler sees 1,000 ads for fast food each year.

Lawyers:

Bans on ads are a frequent occurrence in Europe, but in the U.S. they gain less traction. Last year, a San Franciso judge dismissed a class-action lawsuit seeking to ban Happy Meal toys in California.  But the lawsuit shows that concern is growing, and McDonald's is increasingly the target.

"McDonald's must stop exploiting children at some point," said Michael Jacobson, executive director of the Center for Science in the Public Interest. The Center, along with a mother of two young children, filed the anti-Happy Meal lawsuit.

Eventually, Jacobson believes, McDonald's strategy "will seem as inappropriate and anachronistic as lead paint, child labor, and asbestos."

The city of San Francisco:

In December of 2011, San Francisco put the Healthy Food Incentive Ordinance into effect. The Ordinance requires any meal offering a free toy with purchase to meet strict nutritional standards. Not surprisingly, the Happy Meal didn't make the cut.

The ban was well-intentioned, but McDonald's found a clever way around it. By charging a mere 10 cents for each toy (the proceeds of which go to the Ronald McDonald House Charity), the restaurant ensured that it could continue to market Happy Meals to children.

Clever marketing aside, the Ordinance and McDonald's reaction illustrate the increasing tension between fast food marketers and health-conscious society.  

Santa Clara County, California:

The ban on free toys in unhealthy meals had been introduced one year previously in another California jurisdiction, Santa Clara County.

County Supervisor Ken Yeager explained the reason for the ordinance, claiming that it "prevents restaurants from preying on children's love of toys" to sell fast food, and that it "breaks the link between unhealthy food and prizes."

Chile:

View gallery

.

McDonald's began offering apples in its Happy Meals in 2011. (AP/Keith Srakocic)

Chile issued a similar law in June 2012, requiring fast food restaurants, cereal brands, and popsicle makers to eliminate the practice of including free toys, crayons, and stickers in their packages.

Senator Giudo Girardi, the main political force behind the law, said that the San Francisco and Santa Clara ordinances inspired him to bring the law forward.

"These businesses know that these foods damage the health of children...They're using fraudulent and abusive methods," Girardi said.

Malaysia:

In 2008, Malaysia released guidelines banning fast food ads from children's TV programs and limiting fast food companies from setting up TV show sponsorships.

In a sign that such laws are serious for fast food chains, KFC reacted by changing their marketing outlook. "What we have done," said marketing director Virginia Ng, "is stopped marketing to kids in anticipation of the global movement of marketing to children being unethical...We offer meals for families, but the toys and the rest of it, no."

Is McDonald's slipping?

Though it began offering healthier options, like apple slices in Happy Meals, in 2011, McDonald's has stood its ground in the face of Happy Meal naysayers. "We are very proud of our Happy Meals and will vigorously defend our brand, our reputation and our food," said spokeswoman Danya Proud.

McD's is poised for change anyway, it appears.

Sales are persistently down in crucial Asian and European markets. Comparable store sales in Asia, the Middle East, and Africa were down 3.3% in Q1; in Europe, they were down 1.1%.  Grim macroeconomic conditions and intensifying competition are cited as causes for the disappointing figures, and worries abound that stagnation is going to be a recurring theme for McDonald's.

McDonald's stock fell 8.6% in 2012, a figure that came with a CEO ouster and stale growth in emerging markets, the U.S., and Europe.

Having topped growth records in recent years, this year's slowdown shows that times are changing for the restaurant chain. Matthew DiFrisco of Lazard Capital, a market research firm, rates McDonald's as 'Neutral' — he believes its stocks will remain cheaply valued moving forward.



More From Business Insider

Rates

View Comments (1050)

Recommended for You

  • A tale of two tech giants: Apple's beat, IBM's miss

    Cramer called bottom on Friday, investors now circle back to Apple and leaving IBM behind.

    14 mins ago
  • 3 Companies Poised to Explode When Cable Dies

    The "next big thing" in tech is already in your living room, and these three stocks are poised to explode when cable finally dies!

    AdChoicesThe Motley FoolSponsored
  • Singing the blues: Buffett loses nearly $1B in IBM retreat

    Warren Buffett’s Berkshire Hathaway is IBM’s biggest shareholder, and perhaps biggest advocate. But the Oracle of Omaha took it to the teeth Monday when Big Blue’s quarterly earnings spooked Wall Street. Armonk, NY-based IBM revealed third-quarter results that widely trailed expectations on the top and bottom lines, and was forced to abandon hopes it would reach annual per-share earnings of $20 by 2015. Traders panned the results, sending the shares tumbling 7.1%. IBM has been looking to ride the wave away from enterprise servers and into cloud computing , specifically a realm called the “hybrid cloud.” The hybrid cloud essentially lets firms move certain operations into large, shared computing centers, and then retain the most sensitive operations in-house in a “private cloud.” The cloud unit is definitely growing – but it remains a small portion of IBM’s overall business. The company said cloud-as-a-service revenue has risen 80% year-to-date to an annual run rate of $3.1 billion – a fraction of $97.4 billion in sales Wall Street expects for IBM in 2014. Buffett has been betting big on IBM for years – in fact, he considers it one of Berkshire’s “Big Four” investments, and owns 7% of the massive company.  However, the legendary investor’s optimism didn’t exactly pay off Monday: Berkshire lost $908.8 billion in a single day on the stock, brining the conglomerate’s holdings in Big Blue down to $11.9 billion, according to a Yahoo Finance analysis of FactSet data. Elsewhere in investing-titan news, John Paulson is getting clobbered on his investment in Shire. The hedge fund manager was pushing for a tax-inversion fueled merger between the Ireland-based firm and U.S.-headquartered AbbVie. The duo officially terminated tie-up talks late Monday. Shire’s shares have plunged 21.7% since early July. A review of Paulson’s holdings in Shire’s shares trading in New York and London shows the fund manager is down roughly $445 million on the trade, including currency fluctuations. FOX Business’s Charlie Gasparino, however, reports that the bet is leveraged ; suggesting Paulson’s loss could be closer to $1.5 billion. [Top Image: Reuters]

    14 mins ago
  • In market storm, a rush to trade volatility itself

    As the markets gyrated last week, many investors attempted to make money by trading volatility itself. That's a risky gamble.

    14 mins ago
  • Here's how JPM is investing for its top clients

    JPMorgan's Private Bank invests on behalf of ultra-rich clients. Here's how to tap its strategies.

    14 mins ago
  • Who wins, who loses if Apple Pay takes off

    Apple Pay worked great for a quick purchase tee shirt purchase at Macy's, but a lot more companies than just Apple could win or lose if the mobile payment platform catches on.

    14 mins ago
  • Texas Instruments tops Street Q3 forecasts

    On a per-share basis, the Dallas-based company said it had profit of 76 cents. The results surpassed Wall Street expectations. The average estimate of analysts surveyed by Zacks Investment Research was ...

    14 mins ago
  • Suddenly, Google looks shaky

    Google's big business — search advertising — isn't growing as fast as it used to. In fact, it's growing more slowly than it has in years.

    14 mins ago
  • Millions of Shoppers Are Looking to Brad's Deals

    Brad's Deals is on your side as a consumer, publishing unbiased information on the web's best deals. Don't miss the next great deal. Join for free

    AdChoicesBradsDeals.comSponsored
  • Fidelity Contrafund loads up on Facebook and it pays off

    The $108 billion Fidelity Contrafund continues to have a big appetite for Facebook Inc's stock, adding to its position in the social media company during the third quarter and praising its mobile ad revenue growth and "visionary management."

    14 mins ago
  • Microsoft CEO on the cloud, inequality & spinoff

    Microsoft has proven its potency in the cloud, and is one of three companies with the scale, resources, and know-how to dominate the market, CEO Satya Nadella told CNBC.

    14 mins ago
  • Underemployment worse than U.S. data suggest

    Federal Reserve policy makers are missing a key element as they assess the health of the labor market: data that includes whether those who are employed are overqualified for their job or would like to work more hours.

    14 mins ago